This is the first crisis in which the initial response of the central bank is to loosen, not tighten monetary policy, National Bank Governor Anita Angelovska Bezhoska told a virtual conference “COVID-19: Impact on the Economy and Central Bank Policies.”
The virtual conference was co-organized by the Bank of Albania and the London School of Economics and Political Science.
“During the global financial crisis, the lower capital inflows into the Macedonian economy and the increased tendency of economic agents to the euro affected an increase in the key interest rate to stabilize expectations, but this led to an increase in interest rates on loans and a slowdown in credit support. This time it is different, because we faced the coronavirus crisis with a high and appropriate level of foreign exchange reserves, stronger foundations of the economy and the absence of imbalances, which is seen through the solid external position of the economy and moderate inflation,” Angelovska Bezhoska added.
In her speech, she referred to the central bank policies in the region during the current crisis, related to the effects achieved so far as well as the monetary policy challenges for the future medium-term period, National Bank said in a press release.
“Given the severity of the shock, and given the lessons learnt from the global financial crisis and already available unconventional toolkits, this time the monetary response is better balanced with the fiscal response and is swifter and stronger especially in advanced economies,” Angelovska Bezhoska noted.
Speaking about the impact of monetary policy measures taken in response to the COVID-19, she noted that they contributed financing costs not to increase, i.e. interest rates are reduced, and solid credit support is maintained. Credit growth continued constantly in almost all countries in the region with an average rate of about 6.2% and 7.3% in North Macedonia.
The panel discussion tackled the current situation which creates uncertainty, especially due to the duration of the health crisis, and several segments to which policy makers in the region will need to pay special attention in the coming period. The need to further strengthen the economic fundamentals and the resilience of economies to future shocks was also emphasized, especially through the continuation of structural reforms.
During the virtual conference, the Governor exchanged opinions with colleagues from other central banks on current issues related to the economic challenges of the COVID-19 crisis as well as on the importance of access to euro liquidity provided by the European Central Bank to the National Bank.
